In addition to capturing perceptual similarities between objects, categories encode hidden realities about the world. Because of their rich inductive potential, they promote inferences beyond that which is perceptible. A simple category label can convey crucial information- namely, that two physically dissimilar objects are actually members of the same kind, and that they therefore share similar underlying features. The goal of this research is to explore the development of children's willingness to accept and use category information that is not perceptually obvious. It is now well established that preschoolers can form and use categories that are not perceptually obvious, but little is known about the origins of this important ability. In the first set of studies, infants will hear a category label for an object that is perceptually ambiguous (e.g., an animal that could be a squirrel or a rabbit) or one that is perceptually misleading (e.g., an animal that looks like a rabbit). The second set of studies will use novel objects and labels, and will systematically vary the similarity of the objects called by the same name. In both sets of studies, imitation procedures will assess whether label are used to draw category-appropriate inductive inferences. By considering the role of labeling in the formation of categories, this research will make important contributions to the fields of cognitive and language development.